OHCA seeks budget increase to restore provider rates

State agency officials in all departments are working on their budget requests, which detail any appropriation hikes they argue are appropriate. The state’s Medicaid agency request includes a net $44 million increase to, among other things, reinstate pre-recession provider rates.

Medicaid uses state and federal money to offer low-income residents health coverage. The program uses a fee-for-service scale to reimburse hospitals, doctors, nursing homes and other medical providers. Those scales are known as provider or reimbursement rates.

The Oklahoma Health Care Authority manages Oklahoma Medicaid. And like all other state agencies, lawmakers have cut its budget repeatedly since 2009. When the authority undergoes cuts, it has a few choices: reduce the number of people on Medicaid, reduce the services Medicaid covers or lower those reimbursement rates. Agency officials tend to choose the third option. That has equated to consistent provider rate drops.

The Oklahoma Health Care Authority’s governing board met on Thursday, and agency officials explained the full budget request to them. It included a few other investments. Overall, the requested hike would cost more than $100 million, but increases in federal funding would offset that cost, lowering it to $44 million.

The federal government matches any dollar that the state puts into Medicaid – plus some. That rate of increased investment for each dollar is based on the state’s Federal Medical Assistance Percentage, or FMAP. That percentage is based on the average per capita income for each state relative to the national average. Oklahoma’s percentage increased for the second year in a row. For every dollar Oklahoma puts into Medicaid in 2019, the federal government will put in $1.66, according to a recent report from the Kaiser Family Foundation.

That percentage increase means Oklahoma will get about $127.2 million more in federal Medicaid funding over the year than it did the year before, but because it’s losing some money from a different federal revenue stream, it will be more like $107.8 million.

That would more than pay for the increase in provider rates across the board. Making those increases apply across the board means they would apply to all providers, from labor and delivery doctors to nursing homes.

Medicaid rates are often compared to a benchmark, Medicare rates. Before Oklahoma hit hard financial times, several Medicaid rates were even with Medicare rates. But the cuts meant percentage drops below that.

Hospitals are now at less than 60 percent of the Medicare rate, said Rick Snyder, the vice president of finance and information services at the Oklahoma Hospital Association.

Dropping Medicaid rates can make operating difficult for any kind of provider, but for hospitals, much of that difficulty is concentrated in certain procedures or locations. For example, one of every two Oklahoma births is paid for with Medicaid. In some places, Snyder said, that rate is even higher.

“Small rural communities, in some cases, have a higher percentage of Medicaid (patients),” he said.

Five rural hospitals have closed in recent years, and raising reimbursement rates could stymie those closures, he said.

This budget request would not get hospitals up to Medicare rates, but it would get physicians up to them.

“We’re just thoroughly overjoyed,” said Dr. Dwight Sublett, the incoming president of the state’s Academy of Pediatrics affiliate.

He said he was an adviser with the Medicaid program back in 2007, before the downturn. He and other officials developed a plan that funded Medicaid reimbursement rates, much of the time up to the Medicare benchmark.

“For the most part, it was coming together really well,” he said. “And then of course, the downturn in the economy came, and we had to take cuts.”

Low provider rates for physicians have an effect similar to dwindling teacher pay, he said. Talent doesn’t want to stay somewhere that underpays them. And low rates compound staffing issues in rural areas. There, he said, Medicaid enrollment tends to be higher, so rates hit harder.

“You’re very much dependent on the state to be able to maintain a livelihood,” he said. “If we’re going to grow an economy, health care and education – we’ve just got to get it right.”